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Mar 2011

After bankruptcy, back to good credit

Posted by / in After Bankruptcy / 23 comments

Just now got a call from Lester (not his real name) who filed Chapter 7 bankruptcy with me in July 2008. It was discharged in November 2008.

After bankruptcy and back to good credit

Lester got a car loan at 7% less than three years after his bankruptcy.

He was telling me this weekend, he got approved for a car loan at 7.0% (Around Christmas, he bought a big screen TV at HHGregg, with 12 months at no interest.) And the car salesman told him his credit score was 680. Can’t argue with that.

He had worked real hard getting some credit right after the bankruptcy and rebuilding very carefully. (He was also continuing to make his house payment on time, although, as I explain to people, it still shows bankruptcy for the house on his credit report.)

This is pretty much what I tell everyone who asks. (Actually I tell people its usually three years after discharge before you can get a car at 7%. He did it in two years and three months.) But a lot of people still wonder.

As a Virginia bankruptcy lawyer, I talk to a lot of people who believe it will be seven years before they can get back to good credit.  So I was glad when Lester gave me permission to post his experience, for you to read.  And to show to people who say you will go seven years with bad credit.

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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

  • John P

    April 12, 2011, am30 12:57 AM

    Attorney Weed,

    Wish I’d found you for my BK (and related credit guidance), I wouldn’t be paying 11.25% on my auto loan now (six years after my BK!)

    I live in NC, filed my CH7 BK in April 2005, discharged July 2005. Until about a year ago, I haven’t really paid attention to my credit reports, just going “with the flow” (stupid), since I have a steady, good-paying job and been able to keep up with my mortgage payments (except two 30-day defaults once each in 2009 and 2008), although I’m maxed out on credit cards and auto-loans to the tune of about $20k.

    With John Cummuta’s help, I am finally beginning to seriously assault my debt. But now that my eyes are open, I want to make the most of my credit. Last month (March 2011), I checked my 3 credit bureau reports (and free score 1-time trial), and found the following:

    EXPERIAN lists my mortgage as a BK acct, CLOSED, and shows no payment history at all. (Score: 606)
    TRANSUNION lists my mortgage as a BK acct, but reports “PAID OR PAYING AS AGREED,” and shows 24-month payment history. (Score: 629)
    EQUIFAX lists my mortgage as ACTIVE, and shows its last 5-year payment history (Score: 680)

    Q1. Are all these reporting methods (about the same mortgage), accurate?
    Q2. My mortgage company said they’d not report positive to the bureaus (they say they report the same info to all 3 bureaus – go figure!) unless I “REAFFIRM.” Even after the initial 7 year reprieve, they insist they’d not report positive until I re-affirm. Can they do this legally?

    Sorry to bother you, but I’d appreciate any light you can shed on this, Sir.

    • Robert Weed

      April 19, 2011, pm30 6:17 PM

      Actually I think Experian is right, but you sure don’t want to argue with the other two, since they are helping you.

      And no, you cannot reaffirm after the case is closed–nor do you want to.

  • John P

    April 20, 2011, pm30 10:19 PM

    Thanks for your response, Mr Weed. Appreciate it. Quick followup questions, please…

    After my 10-year BK negative reporting on my credit report,
    -How is the mortgage reported on my credit reports?
    -Can I re-finance it NOW to have it reported as an ACTIVE mortgage?
    -Can I take out a 2nd mortgage with the equity (about $25k) built in my home so far to pay off my credit cards/vehicle loans?

    Thanks again in advance!

  • Robert Weed

    May 14, 2011, pm31 12:51 PM

    It’s only an active mortgage if you refinance it with a new lender. Any new deal with the old lender is still discharged by the bankruptcy.

    You can take out a second mortgage to pay off your credit cards and vehicles–but boy, I hardly ever think that’s a good idea. In the six years since you filed your bankruptcy, have the credit cards gotten out of hand again? Rather than trying to refinance, you need to think how you can change your budget and pay them off!

  • John P

    May 16, 2011, pm31 10:38 PM

    Thanks for the honest advice, Atty Weed.

    The ills of debt has finally clicked for me, and I am not looking back until I am completely debt-free in 7years (including the mortgage) using the Rapid Debt Reduction (snowballing) pay-down system expoused by John Cummuta.

    I appreciate your kindness.

  • Chapter 13 bankruptcy and your credit report. How to fix what’s wrong.

    June 15, 2011, pm30 12:44 PM

    […] credit. (Assuming life hasn’t knocked you down again.) You can get a car loan at as good a good rate. You could already be a year or two in your new […]

  • Todd H

    July 20, 2011, am31 11:39 AM

    I was just reading this article and thought I would share my post-bankruptcy status. I was discharged from bankruptcy 2 years and 2 months ago, and have only checked and corrected my errors in all 3 reports one time (about a year after bankruptcy discharge). Since then, the only thing I have been paying on is my car, which I paid off 5 months ago, and my student loan, both of which have never been late. I just checked Myfico.com scores, and my score was 689. I have not even tried to open any new credit, or even thought about repairing the existing credit. I also checked my Experian score because the woman at my FCU said that’s the number they use for auto loan rates. My Experian score is 686, and she said I will qualify for a 4% interest rate for a 48 month or less loan, or 5.1% for a 60-72 month loan. They will also knock of .25% for direct withdrawal, which brings that down to 3.75%. My last car loan rate was 7.9%, and that is when I thought I had really good credit. Unbelievable, bankruptcy actually lifted my score from where it was just 2 years ago. My only question is, if my credit is so “good”, then why have I received absolutely zero credit card offers in the mail in the last 2 years, even though everyone that I know or read about gets offers in the mail within a few months? And I know for a fact my score is much higher than a friend of mine who already has 3 unsecured cards 2 1/2 years after bankruptcy.

    • Robert Weed

      July 20, 2011, am31 11:59 AM

      Thanks for sharing that great report on getting back to good credit after bankruptcy.

      I also wonder why you have not gotten any credit card offers. You could go on the internet and apply. One good website to try is bankrate.com.

  • Robert Weed

    August 5, 2011, am31 11:13 AM

    Just talked to Shannon (not her really name) who filed with me in May 2008 and discharged August 2008. Exactly three years ago. Shannon wanted me to look over her credit report because she is trying to buy a house.

    Shannon had gotten a car loan a year after the bankruptcy–sooner than I recommend–at 18%; but a few months ago her credit union refinanced it a 5.25%. That’s a great rate! Three years after bankruptcy.

  • John B

    January 31, 2012, pm31 8:10 PM

    My Chapter 13 was discharged in December. I have been trying to refinance my home. Been offered great rates. Problem is..my Credit Scores have disappeared. Lender says I need 3/4 scores between my wife and I to get the mortgage. She has one showing at 686, but mine are not showing at all. About a year ago we tried to refinance through same lender and wife had 2 scores and I had 2 scores. We didn’t do it then, because we decided to pay off Chapter 13 first. Now we need to know how to get our scores back. We have opened a unsecured credit card each, and paid balance in full, but still no credit scores.

    • Robert Weed

      February 1, 2012, pm29 8:17 PM

      I just don’t know. I’m surprised someone is talking to you about a mortgage this soon after a Chapter 13. I tell people to get a small credit card while they are in chapter 13, charge a little every month and pay it every month. Try again in a month and see if they come back. Please let me know how this comes out, because I’m surprised they are talking to you this soon.

  • Kenny

    February 1, 2012, pm29 8:10 PM

    My BK chapt 7 was finished in Sept 09. My current credit score is 683. I have great income (over 100k) and no debt. I have never had a car loan in 20 plus years and was looking at a car loan for the first time. The car dealer said my score was fine, but due to the BK they can’t approve it. Is there something you would recommend to do?

    • Robert Weed

      February 1, 2012, pm29 8:15 PM

      I think that car dealer is trying to scam you–although I can’t tell how. Go to your own bank and apply for a car loan–they will be happy to give you one. Then go shopping for a car and see if the dealer can beat what your bank offered you. Don’t think I’d go back to the dealer that pulled that on you. If you look on my survey page, https://robertweed.com/resources/lifeafterbankruptcy.pdf, two of the people who filed BK about when you do told the survey firm they had gotten car loans–one a 6.9% and one at 5.9%. They also said their credit scores are about what yours is.

  • Ames

    February 11, 2012, pm29 3:32 PM

    I just thought I would share my bankruptcy story as well. Have HOPE…there is life after bankruptcy! After losing my job and going through a divorce in November 2009 I struggled to pay my bills and mortgage but ultimately I couldn’t keep up and filed for bankruptcy in February 2011. It was discharged in May 2011. Also, in May 2011 I became employed again. In August 2011, I applied for an unsecured credit card through Credit One Bank and was approved with a $600 limit. In October 2011, I applied for an auto loan through my credit union and was denied. I called and spoke with a credit union loan rep and was approved with the condition that I put down 20%. My interest rate ended up being 5.99% (not too shabby!)
    I was so scared to file for bankruptcy, thinking that my credit report would never recover. My credit score is higher now than it was when my credit was “good”.
    I’m not saying that it is the right choice for everyone and God knows that I have drastically changed my spending and saving habits. It is the only way to not end back up in the same situation again. Don’t let the fear and shame of bankruptcy ruin your shot at a new start in life!

    • Robert Weed

      February 12, 2012, am29 8:40 AM

      Thanks for sharing that great story!

  • John B

    May 21, 2012, pm31 10:48 PM

    Just a little update from my post in January. In February, we each applied for and got Capital One unsecured credit cards with $500. limits. We were also approved for a new car worth $24,000 with a $500. down payment and trade-in worth very little. 3.9% with Ally Bank. On March 3, the mortgage lender we were trying to refinance with called to tell us our credit scores were available again.. My 3 were in the low 700’s and so were my wife’s. On April 30th we were approved and closed on a refinance loan with cash-out on our home at a rate of 3.75%. Needless to say, we are very happy with our fresh start, and hope anyone reading this can be as fortunate as we were. Mortgage company name and contact person available upon request.

  • Sarah H.

    August 3, 2012, pm31 1:42 PM

    I filed bankruptcy back in 2009. I have a new vehicle since the finalization of my bankruptcy in March 2010. The company I loaned from is called Prestige Financial. I have been making payments faithfully for 2 years and notice that my loan has only gone down about 4K. I have been paying nothing but interest and my payments are $450 a month. This was the only company offering to give me a loan at the time and had an interest program that doesn’t do much of anything at all. I can’t sell the car because the remaining balance vs blue book value is too high for me to get a loan with my current credit score. They refuse to work with me being that I am going through hardships with work and the thought of paying for two years with no difference to my credit or loan makes me ill.

    Is there anything that can be done? They have endless compliant reports on their customer service and practices. What are my options? I can’t afford this loan anymore and I am throwing away what little money I have and I still owe 5 more years. I understand that they are in the business to make money but this is causing more hardship for people who are already struggling. The interest rates are ridiculous. I just want out.



    I should have done my research before signing this contract. Now I am stressed to think of the means they will go through just to get money and I do not want to deal with this for 5 more years. I mentally cannot handle it. I am not late and my account is current.

    • Robert Weed

      August 3, 2012, pm31 1:50 PM


      I am so sorry you are in this situation.

      I try to tell people do NOT buy a car until THREE after your bankruptcy if you have ANY WAY AT ALL to get to work. Of course, if you don’t have any other way to get a car, then you have to do what you have to do.

      There’s not much help for you now. We can file a Chapter 13 bankruptcy and cut your car payment way down. A second bankruptcy would be a terrible hit on your credit report. You would only want to do that if you just can’t make the payment and they are about to repossess the car. An after bankruptcy repossession would be terrible on your credit, too, and you’d be back to walking to work.

      So if there’s anyway, you just need to keep making the car payment. If you just can’t do it, we’ll talk about Chapter 13.

  • Herb

    June 18, 2013, am30 3:58 AM

    Hi I have a chapter 7 bankrupty against bank of america on my house that was discharge 1 year and a half. I have been occupying my house for 2 years without a payment, trying to get a modificiation. I have little income, and its hard for me to save money., due to paying my school tuition, car payment utilities and buying food, but I did pay my tenants associations due. I was declined again for a loan modification from the private investors on this loan. Should I wait for the foreclosure?, but in the mean time look for an apartment? And since I filed the bankruptcy do I still owe money on the house? I didn’t ask
    the lawyer because the case is over 1 year old. Your website is the greatest. Ps: Bank of american said if the private investors don’t want to modify this loan they don’t have to. Where is the Obama plan?

    • Robert Weed

      June 18, 2013, am30 10:41 AM


      Thanks for your comments.

      Yes, I think you hit the nail on the head. You should look for an apartment but wait for the foreclosure. You obviously need to live for free as long as you can, so you don’t want to move out early.

      PS the Obama plan is mostly “voluntary.” They are required to consider modifications, but they don’t have to make them. If you want to get a mod, you need some income. Enough that they think you can make a payment that’s worthwhile for them to accept.

      • Herb

        June 19, 2013, pm30 4:54 PM

        Sir you’re are the best, Now I can sleep not much but just a little bit better. Knowledge is power and you definately have it. You have given me some vision. Thank you so much.

  • Herbert

    August 14, 2016, am31 9:30 AM

    Hi my name is Herb I live in the state of Florida, I was discharged from a bankruptcy in 2011, will I be able to file again. I am in financial difficulty again do to unemployment, and at age 65 having to have to participate in medicare reduce my social security check amount. I want to work by I live in a rural area where they are particular as to whom they are going to hire. Please help Thank you, Ps I had a chapter 7 discharge

    • Robert Weed

      August 14, 2016, pm31 3:06 PM


      Since its been more than four years, you are eligible for a Chapter 13. In chapter 13, usually, you’d have to pay all the court thinks you can afford for three years, then the rest of the debt would be wiped out. Talk to a lawyer in your area about what that would be like for you.

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